U.S. Companies in China Fear Trump's WeChat Ban Could Be Bad for Business

Heard of the Great Wall of China? Meet the Great Firewall of America.

Steven Lerner
    Aug 26, 2020 2:00 PM  PT
U.S. Companies in China Fear Trump's WeChat Ban Could Be Bad for Business
author: Steven Lerner   

An overwhelming majority of U.S. companies in China project bad business outcomes if President Trump follows-through on his pledge to ban WeChat by executive order, according to a new survey.

About 88% of respondents from companies that follow U.S. jurisdiction say that there would be a negative impact on operations as a result of the potential loss of WeChat.

More than half say a WeChat ban would result in a loss of competitiveness, and 41% expect it to have a negative decision on revenue.

If Trump's executive order applies to U.S. companies and U.S. citizens in China, nearly half believe revenue would drop. 

Trump issued a directive on Aug. 6  that would ban all U.S. transactions on WeChat, which would go into effect in 45 days. Citing national security concerns, the White House alleged that WeChat and its parent Tencent collect Americans' personal information on behalf of the Chinese Communist Party.

Tencent has repeatedly disputed the allegations and says that it follows all privacy laws.

The American Chamber in Shanghai (AmCham) conducted the poll on August 24-25 and included 142 respondents. Over a third of respondents maintain partnerships and content relationships with Tencent.

Despite the doom and gloom, respondents are not as pessimistic if the executive order was limited to U.S. transactions. Under that scenario, 46.5% say the impact would be limited and a quarter of respondents said there would be no impact on their company.

About 88% of respondents rely on WeChat to communicate with employees, with 77% leveraging it for marketing purposes. 

While there are other communication tools besides WeChat, 75% of respondents don't believe that there is an equivalent tool in the market. A poll from Weibo found that the majority of Chinese users will buy another mobile device if Apple removed WeChat.

"Frankly, if the U.S. government bans Wechat, then they are no different than the Great Firewall in trying to control and manipulate the information and data that it's citizens have access to," says one unnamed survey respondent.

"If Wechat has or is doing anything illegal in the U.S., then take appropriate action in that jurisdiction, but do not ban American citizens from choosing to use the application."

Another anonymous respondent suggests that the U.S. implement a grace period before taking any action.

Since the specifics of the potential executive order have not been revealed, including the scope of the ban, it's difficult to correctly gauge the impact on business. 

 Thus, it's possible that the potential loss of WeChat is being overstated.

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